India’s economy was already immensely slowing down before the pandemic began. India is also currently the worst hit G20 economy out of all. Due to the sudden halting of major economic activities and the already slowing economy, India would need significant time to recover from it.
Official data was released by the National Statistics Office (NSO) on Monday 31st August. It presented the comparison between the April-June quarter of 2020-2021 financial year and the same quarter of the last financial year. From the data as a result, the GDP contracted to a -23.9 percent in the April-June quarter of 2020-2021.
Conclusions are being drawn that due to stringent lockdowns since the month of March due to the COVID-19 pandemic has led to the contraction. The pandemic has since then, reduced the already fragile consumer demand declination and private investments. It also shows the heavy brunt the Indian economy had to bare due to the halting of major economic activities due to the pandemic.
The drop in economic output compares to the 3.1 per cent growth in the previous quarter, which was the worst the economy saw since eight years. This major economic contraction arrived after 40 years. This also is the very first GDP shrinkage after India started releasing data in quarterly figures in 1996.
The economy already reported a slow growth of 1.7 per cent in the January-March quarter. This is the lowest growth since 17 years. The GDP also managed to decline from 6.1 percent in FY19 to 4.2 percent in FY20. The slowest growth since 11 years. (Source: BusinessStandard)
The Reserve Bank of India (RBI) declared that transport services, hospitality, recreation and cultural activities are severely impacted. The shock to demand is so severe that “it will take quite some time to mend and regain the pre-Covid-19 momentum,” the RBI claimed in its annual report.
To make matters worse, India’s economy was already slowing down prior to the pandemic. A crisis in the shadow bank sector affected latest loans and reduced consumption, which accounts for close to 60 per cent of India’s GDP.
Economists polled by Reuters had predicted a contraction of 8.1 per cent and 1.0 per cent in the September and December quarters respectively. which just spells out that Indian economy would require significant amount of time to recover from the recession. (Source: News18)